Sensex Technical View :
Finally Sensex breaks below the 12300-12500 level and is well set towards the zone of 11200/11500/11900. Sensex is in the panic selling zone and should soon see support coming around the lower end of the channel at 11200 -11500 zone . The levels are important on closing basis for near term. Although it is very difficult to spot an exact short term bottom in current conditions but technically would expect it to be between 11200-11900 from where markets could bounce back in a bear rally which can be to the extent of 20-25% from lows technically. This is a technical view only and doesnt consider other factors !
Even if technically one expects a fall to 9500-9700 Sensex needs a bear rally to an extent of 20 % from lows. The exact levels for the bear rally can be discussed once we can confirm a bottom in the current zone.
Market strategy :
Since 16k-17k broke down on Sensex the view was consistent to exit and wait for 14k-12.5k zones for investment. Again after the accumulation the view was to exit at 15k + .
Yet again the view has been consistent to buy in stock specific in small lots from 13k-11.2k. Although this would be easy for people who have been following the views strictly and for others the pain in markets could get unbearable as of now.
This is a time only for investors who have patience and do pick up good quality stocks with due research done. As it happens in euphoria stocks can stay at highly overvalued levels for quite some time similarly in pessimism and panics lot of stocks can stay much lower then fair value. So best way to go is buy in small lots and go staggered as its very difficult to spot an exact bottom in panics. 11200-12200 is a good zone to buy stock specific and look to book them partially on profits of 15-25 % to keep a good cash level . One should not commit more then 50 % at 11900-13k and add only at 11200-11500 if it comes or wait . For people those who are stuck can commit fresh money at 11500 or roundabouts only with a view to exit on 25 % gains and lock that money out as part of discipline and consider it fresh money !!! .
For traders this may not be the best time as volatility will be very high and one needs to play with strict stops and agility.
Market Observations and Thoughts :
Dow Jones Technical View :
The next dip should take it to the 61 % correction level which comes to 9800-10000 zone. And for the very long basis 38 % comes around 9500 .
So in the bear scenario it is in the index could well settle out closer to 9800 +- 200 points.
After the bounce from 10500 levels Dow Jones has taken the dip towards 9800 zone and in worst case can go till 9500 odd . Technically it will get highly oversold in this zone and a bounce back should be in the offing from this point and then some sideways move. Although technically the index looks weak in the long run .
Crude : The downslide continues in crude and could see respite only at 85 levels and 100-101 on upside could be an important resistance.
Gold : The volatility remains higher then usual coz of the economic scenario. Resistance on upside 885/900 and support on downside 780/810.
Randomn Thoughts :
Some of the lines which can be important for next few hours :
" Lay Investors dont sell in LOSS they sell only in PANICs"
" Venturing out in rough weather can be fruitfull in market"
Suddenly one can see a panic and pessimism equivalent to the euphoria which we were seeing in January 2008 . The capitulation and panic may have brought in such unimaginable and dirt prices in many stocks to the extent of 80-90 % of the peak price but such a fall may create a short term or even a very important long term bottom zone after which markets could consolidate. Like in Novemeber to January Sensex dint make very big highs or crossovers but continued to stay at higher levels we may see Sensex and indices continue to stay at lower levels and consolidate before deciding the next move.
All global markets have turned highly oversold in the current state and quite a lot of economic news might have been already discounted in the near term and a decent bounce should be in the offing. There is a lot of blood on the street but thats when the real opportunities come in and also the greed of lower level buying may dissuade investors the same way greed dissuaded investors from selling in January. So even if one is panicky and wants to get out he may get little better chances in coming days!.
Stocks to watchout for :
Punj Lloyd and Educomp cracked quickly as expected and should be covered on tgts.
Bank of India which stood the storm may finally crack if sustains below 260 could tgt 248-225.
Bharti Airtel another stock which has not broken 680-700 levels in spite of market fluctuations. Need to watch that level closely if holds could give a bounce other wise a quick drop.
BHEL important supports at 1340-1400 which should hold on for some time.
RPL has broken below 140 and the next major support is placed at 108-112 .Reliance inds has a strong support at 1550 and one needs to buy the stock in staggered manner.
Chamble Fert,IFCI , IDFC look highly oversold and can give a sharp pullback and are fundamentally well placed for long term value also .